Fannie Mae (FNM) Ready to Provide Liquidity

Chief Executive Daniel Mudd told the National Association of Federal Credit Unions this morning that Fannie Mae is ready to provide liquidity to the mortgage market. Mudd noted that mortgage-buyer FNM is in talks to lift the existing cap on the number of mortgages it can purchase. Fannie Mae has reportedly asked its regulator to purchase more mortgages in order to keep cash flowing into the mortgage market, but that request has thus far been denied. Additionally, Mudd noted that FNM is working to mend its accounting problems "full-time, full-speed."

The shares of Fannie Mae are down about 1% as today's session begins. The stock is currently supported by its 10-month and 20-month moving averages, though overhead pressure looms in the form of its 40-day trendline. This short-term moving average has effectively stifled the equity's progress for the past week, rebuffing FNM's every attempt to rally higher.

Meanwhile, option traders have taken a pessimistic stance on the stock. Fannie Mae's Schaeffer's put/call open interest ratio of 1.71 is higher than 85% of other such readings taken on the equity in the past 52 weeks, indicating a relatively high level of bearishness from the speculative crowd. On the other hand, analysts have awarded the company 6 "strong buy" and 2 "buy" ratings, according to Zacks, with just 2 "hold" recommendations rounding out the rankings.